Filing for Bankruptcy? These Mistakes Could Cost You Everything

Filing for bankruptcy can give you a clean slate, but only if you do it right.

Too often, we meet clients who unintentionally hurt their case before it even begins. Whether it’s hiding assets, filing the wrong chapter, or trusting the wrong advice, small missteps can have major consequences.

Let’s break down the top 7 mistakes people make and how you can avoid them.

1. Hiding Assets or Giving Them Away

“If I transfer my car to my cousin, the court won’t find it, right?”

Wrong. The court reviews your financial history, and any suspicious transfer can be seen as fraud.

Learn more in our guide on How to Protect Your Assets Before Filing Bankruptcy.

2. Running Up Credit Cards Before Filing

If you go on a spending spree just before filing, creditors may challenge your discharge. Using credit for luxuries or cash advances right before bankruptcy is a red flag.

3. Repaying Friends or Family First

You may want to pay back your mom before the banks, but the law doesn’t work that way. Preferential payments to insiders within one year can be clawed back by the trustee.

4. Filing Without Understanding Chapter 7 vs. Chapter 13

Filing under the wrong chapter can lead to dismissal or higher repayment than necessary. Choosing the right path depends on income, assets, and goals.

Read our blog: Which Type of Bankruptcy Is Best for You?

5. Lying or Omitting Info on Your Petition

Even honest mistakes can look like deception. Always disclose all debts, assets, income, and lawsuits.

6. Waiting Too Long to File

Trying to “hold on” until things get worse often leads to lawsuits, garnishments, and loss of property. Timing can be everything, especially with things like inheritance or tax refunds.

7. Not Working with a Bankruptcy Attorney

Online forms and DIY options might save you money now, but could cost you way more if your case is denied. Bankruptcy law is complex and unforgiving.

Avoiding Mistakes Starts with Good Guidance

You don’t have to navigate bankruptcy alone. Our firm helps you avoid missteps and set up your case for success from day one.

👉 Schedule a free consultation so we can help you do this the right way — no guessing, no surprises.

Contact Pagán López Law Today

Pagán López Law
28-07 Jackson Ave, Tower 3, 5th Floor
Long Island City, NY 11101

Phone: (646) 216-8881
WhatsApp: (347) 434-3041
Email: info@paganlopezlaw.com
Website: www.paganlopezlaw.com